Tue., 12:06pm: Gambling, racing at crossroads in West Virginia

January 7, 2014

SOUTH CHARLESTON - The gambling and racing industries in West Virginia remain at a crossroads as statehouse officials and industry insiders struggle to combat declining revenues caused by competition from surrounding states.

Although lottery revenues have continued to exceed $1 billion for more than a decade, Senate President Jeff Kessler, D-Marshall, said the Mountain State is no longer the only game in town.

"It's no secret," Kessler said. "Revenue is declining. We no longer have the monopoly. We were so successful that other (states) decided to copy us. Now, there is gaming in Pennsylvania, Ohio and Maryland."

"It (revenue) also is down because of a function of population," Kessler added. "We relied on out-of-state visitors. Initially, there was a big draw, but at some point that levels out, especially with all the competition. The challenge for us is to bring back those people from surrounding states."

Kessler was among a panel of experts addressing the state's gaming woes at Monday's annual West Virginia AP Legislative Lookahead at Marshall University's South Charleston Campus.

Fellow panelist John Cavacini, president of the West Virginia Racing Association, agreed, stressing the need for a successful marketing campaign that not only promotes gaming, but horse and dog racing as well.

"The survival of the industry will depend on the marketing aspect," he said. "Amenities like a hotel spa and golf course all have a draw of their own. We have to have an attraction in addition to gaming. It's the extras that make a difference and will make a difference in being successful or not being successful."

Cavacini, though, said before that success can be realized at the state's four racetracks - Mountaineer, Hollywood Casino at Charles Town Races, Wheeling Island and Mardi Gras Casino & Resort in Charleston - improvements need to be made.

The racing chief noted upgrades to the brick-and-mortar facilities are needed and each establishment must stay up-to-date with current technology in its slot machine offerings. This, Cavacini said, will ensure the preservation and eventual expansion of the 4,000 jobs that are at the heart of gaming in the state.

"We need to be able to provide customers the best experience possible," he said. "None of the other states require that hotels be built at their casinos. That's an amenity that they don't have that sets us apart."

"Despite a decrease in revenue, none of the tracks has given up on West Virginia," he said. "In fact, Mountaineer Park is upgrading every hotel room in its operation. They already have a model room, and they are going to use that with all 300 rooms. Also, Charles Town is in a position of upgrade every month. We only have so much for capital investment at each track. If we upgrade facilities and add amenities, hopefully we will be able to attract people from surrounding states."

Declining revenue and improvements to racetrack infrastructure are not the only issues facing the state.

In recent years, there has been a steep decline in attendance and profit margins on the racing side. Charles Town is the only track in the Mountain State to turn a profit in terms of racing. That has led to concern from racing officials over the possible elimination or reduction of horse and dog activities. The need to modernize also was in the cards.

"We need to work with the tracks and Legislature to keep a competitive edge," said Randy Funkhouser, president of the Charles Town Horsemen's Benevolent Association. "From a racing standpoint, we have talked about advance deposit wagering, upgrading the wagering prospects and even Internet gaming."

That's one reason racing officials commissioned a study on the economic impact the industry has on the state.

"We looked at the impact horse and dog racing has, not on casino gambling," said Eric Bowen, a member of the Bureau of Business and Economic Reasearch at West Virginia University. "These industries do have a big impact with several hundred million in revenue coming into the state economy. The industry also provides several thousand jobs. We need to find a way to maintain this industry."

The group's report is expected in the coming weeks.

Sam Burdette, of the West Virginia Greyhound Breeders Association, said he thinks the racing industry deserves a lot of credit for establishing the tracks in the state.

"Racing paid for the development of the locations, the land and the buildings," Burdette said. "Racing is an integral part of all this."

"Our purses have drastically decreased due to many factors," Burdette added. "Last year, I felt the Legislature attacked us with a bill restricting the number of races. Years ago, the Legislature found it was beneficial to keep racing and promised to take care of the industry."

Kessler agrees, noting that new revenue streams must be found in addition to making improvements.

"We must maximize and maintain this industry," he said. "We must meet with the lottery commission and the director to explore some of these opportunities and see what may be viable additions to our model."